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Linking friction, social coordination and the speed of evolution

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  • Cui, Zhiwei

Abstract

We consider a model of social coordination and network formation where agents decide on an action in a coordination game and on whom to form costly links with. We explore the role of linking friction, where an agent cannot change all of her links simultaneously when choosing an alternative linking decision. Given linking friction, interaction structures are not fully flexible. We introduce a new solution concept of static equilibria, local Nash equilibria, and find that the set of local Nash equilibria may include action-heterogenous strategy profiles. Furthermore, risk-dominant strategy profiles are stochastically stable when linking friction is restrictive, and payoff-dominant strategy profiles are stochastically stable when linking friction becomes less restrictive. More importantly, linking friction can greatly accelerate the emergence of payoff-dominant strategy profiles.

Suggested Citation

  • Cui, Zhiwei, 2023. "Linking friction, social coordination and the speed of evolution," Games and Economic Behavior, Elsevier, vol. 140(C), pages 410-430.
    • Handle: RePEc:eee:gamebe:v:140:y:2023:i:c:p:410-430
    DOI: 10.1016/j.geb.2023.04.011
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    More about this item

    Keywords

    Social coordination; Network formation; Learning; Linking friction; Waiting time;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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